Importation of One (1) Set Reel Fed Printing Machine Not Exempt from Value-Added Tax

April 14, 1997 BIR RULING NO. 048-97 101 (a) 000-00 048-97 Kagitingan Printing Press, Inc. Leyland Building Chicago St. cor. 21st Street BSP Complex, Manila Attention: Ramon Ma . Gonzales, Jr . Executive Vice-President Gentlemen : This refers to your letter dated December 11, 1996 which was referred to this office by Assistant Secretary Antonio P. Belicena, Revenue Operations Group, Department of Finance, in effect requesting for a ruling that your importation of one (1) set Reel Fed Printing Machine which arrived on November 28, 1996, is exempt from value-added tax. cdti In reply, please be informed that based on Section 12 of R.A. 8047 stating "SEC 12. Incentives for Book Development Persons and enterprises engaged in book publishing and its related activities duly registered with the National Book Development Board shall be entitled to the applicable fiscal and non-fiscal incentives as provided for under Executive Order No. 226, otherwise known as the Omnibus Investment Code, as amended, subject to the qualifications and requirements set by the Board of Investments (BOI): Provided, That book development activities shall always be included in the Investment Priorities Plan (IPP). In the case of tax and duty-free importation of books or raw materials to be used in book publishing, the Board and its duly authorized representatives shall strictly monitor the quality and volume of imported books and materials as well as their distribution and the utilization of the said imported materials. The Board shall also recommend to the proper prosecuting agencies any violations of the conditions of the duty-free importation. Books, magazines, periodicals, newspapers, including book publishing and printing, as well as its distribution and circulation, shall be exempt from the coverage of the expanded value added tax law. your request for VAT exemption has to be as it is hereby denied for lack of legal basis. Tax exemption laws are strictly construed against the grantee of the exemption and cannot be presumed by mere implication (Republic Flour Mills, Inc. vs. Comm. and CTA, L-25602, February 18, 1970; Comm. of Customs vs. Philippine Acetylene Co., L-22443, May 29, 1971). Based on the aforecited provision, the VAT exemption granted to books, magazines, periodicals, newspapers, including book publishing and printing, as well as its distribution and circulation, shall be limited to its sale distribution, publishing and printing but it cannot be reasonably expanded to cover the importation of printing equipment. Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue